UPDATED: FEBRUARY 17, 2023 | 2 MIN READ
Turning 26 soon? Let’s review everything you need to know about health insurance for 26-year-olds, from understanding insurance verbiage to selecting your best plan.
Turning 26 is a big deal in the world of health insurance: it’s the year you age out of your parent’s health coverage and must find health insurance on your own.
If your 26th birthday is approaching (or you have Medicare-qualifying parents before you turn 26), it’s time to seek health insurance coverage.
But don’t get overwhelmed just yet — let’s review everything you need to know about health insurance for 26-year-olds, from the insurance rules and lingo to where to look to find the best plan for you.
I’m Turning 26 Soon — Does My Coverage End On My Birthday?
As mentioned above, turning 26 in the health insurance world is a big deal, also known as a Qualifying Life Event (more on that below). But your coverage may not necessarily end on your actual birthday. The moment your parent’s health insurance terminates, your coverage will depend on their health insurance plan.
Do your parents have coverage through a private employer-sponsored plan or the Affordable Care Act’s government-run (Obamacare) Marketplace? Here are the timelines for each plan so that you can prepare for your next steps:
- Private Work-Sponsored Plan: This health insurance plan will end on the last day of the month you turn 26. For example, if your birthday is April 5, you will no longer be covered as of April 30.
- Obamacare Marketplace Plan: This plan grants you a little more time. You will have until the last day of the year you turn 26 to sign up for your plan. However, if you plan on enrolling in your Marketplace plan by December 15 for coverage that begins on January 1.
Depending on your state of residence, you may qualify for an “insurance rider” (a policy provision that adds benefits to or amends the terms of a basic insurance policy) that could extend your coverage beyond age 26.
Seven states currently allow this:
- New Jersey
- New York
- South Dakota
You may qualify for a rider as long as you’re under age 29, single (unmarried), and do not have access to health insurance through your employer.
What Is A Qualifying Life Event?
A qualifying life event (QLE) is an instance that triggers a special enrollment period for you to purchase health insurance. Typically, one has to wait until the open or annual enrollment period to enroll, but a QLE allows you to skip the wait.
There are four types of qualifying life events. (Below are examples, not a full list.)
- Loss of health coverage (losing a work-sponsored plan, losing Medicare eligibility or turning 26, and losing parent plan coverage)
- Changes in the household (getting married/divorced, having a baby/adoption, or a death in the family that causes a change in dependents)
- Changes in residence (moving to a different zip code/county or moving to or from the place you attend school)
- Other qualifying life events (changes in your income or becoming a U.S. citizen)
What Happens When I’m Dropped From Their Plan?
Once your parent’s insurance drops you, you’re eligible for a special enrollment period. You’ll be able to sign up for your own plan within 60 days before you’re dropped and 60 days after losing coverage.
Remember that you will not qualify if you’ve voluntarily withdrawn from their coverage or if it expires.
To avoid a potential coverage gap, it’s wise to pick a plan before or during your actual birthday month. Enrolling in a health insurance plan is all about timing.
You will need to sign up within the first 15 days of the month to have coverage that starts at the start of the following month.
For example, if you need coverage that starts on March 1, you must enroll by February 15. If you happen to enroll after the 15th day of the previous month, it will skip a month.
So if you need coverage that begins on March 1 and doesn’t enroll until February 16, your health insurance plan won’t go into effect until April 1.
What Are The Options For Health Insurance For 26-Year-Olds?
Affordable Care Act (ACA) Marketplace Plans
The Marketplace offers a variety of plans and coverage at many price points, and they’re required to offer you coverage regardless of pre-existing conditions (depression, diabetes, etc.). Applying for an ACA Marketplace plan will also check your Medicaid qualifications.
If you have a job that offers health insurance, your 26th birthday will trigger a special enrollment period. This will allow you to enroll outside of the company’s open enrollment. Plan and schedule a chat with your company’s HR department about how to enroll.
High Deductible Plans
If you’re relatively healthy, you may want to consider enrolling in a high deductible health plan (HDHP). These are best for those who don’t require a lot of coverage but want to protect themselves in an emergency. The plans have the lowest monthly payments (in exchange for the highest out-of-pocket costs if used).
The IRS sets the definition of an HDHP each year. As of 2022, the IRS defines an HDHP as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family for care received in-network.
The law limits your total out-of-pocket expenses (including deductibles, copays, and coinsurance percentage). They also cannot be greater than $7,050 for an individual or $14,100 for a family. (This limit doesn’t apply to out-of-network services.)
Your institution may offer a student health plan if you’re currently in college or attending graduate or professional school!
These plans usually offer lower payments and deductibles and will cover you only until you graduate or unenroll from the school. Student plans offer great coverage for school-sponsored health events, such as on-site clinic visits, telehealth services, etc.
To check your eligibility, reach out to the admissions and enrollment office or the campus health services.
Health Insurance for 26-Year-Olds FAQs
I need my health insurance before I turn 26. What are my options?
You may buy an ACA plan before the age of 26. These plans are generally inexpensive and only offer bare catastrophic coverage. If you have any medical bills, you’ll have to pay a high amount (deductible) before any coverage kicks in.
Also, consider enrolling in an employer-sponsored plan or student plan.
What happens if I lose my health insurance at 26 and do nothing?
You should enroll in health insurance for 26-year-olds. However, you will not face federal tax penalties if you age out of your parent’s plan and do nothing. But, some states fine uninsured individuals when they file their state taxes. Check with your state or tax preparer for more information.
Health Insurance for 26-Year-Olds
Enrolling in your health insurance plan for the first time doesn’t have to be overwhelming. Before you turn 26, schedule some time to ensure you’re familiar with the terminology, plan options, and timelines. Once prepared, make an informed decision on the best possible coverage for your needs.